Hungary’s tax penalty consequences of non-compliance with tax requirements are governed by the Act on Rules of Taxation.
The law outlines a range of sanctions for non-compliance, including tax penalties, default penalties, late payment interest and self-revision fees. This blog will provide an overview of each sanction and summarise recent changes in this area.
Types of sanctions in Hungary for non-compliance
In Hungary, there are four types of payable sanctions for not complying with tax rules. While most of these sanctions are imposed by the Tax Authority, the self-revision fee is calculated and settled through self-declaration.
Tax penalty
A tax penalty is imposed as a result of an audit when the Tax Authority identifies a tax shortfall during an inspection. The standard rate is 50% of the unpaid tax, but it can increase to 200% in some cases.
Default fine
A default fine is a sanction that the tax authority may apply in case of a breach or failure to comply with tax obligations specified in legislation regarding taxes and budgetary subsidies. Most default fines are determined as fixed fees rather than a percentage. The law determines the maximum amount of this fine. The Tax Authority has the discretional right to levy it in the maximum amount, decrease it, or void it.
The amount that the Tax Authority can levy depends on the type of non-compliance and the taxpayer’s status, i.e., whether it is an entity or an individual taxpayer. For example, a default penalty can be levied for missed or late submission of a tax return.
Late Payment Interest (LPI)
LPI is charged when tax liabilities are not paid on time. The interest is calculated daily, and the rate is based on the central bank’s base rate plus five percentage points divided by 365. The Tax Office determines and assesses the amount of LPI.
Self-Revision Fee (SRF)
A Self-Revision Fee (SRF) applies when taxpayers voluntarily amend their tax returns to report a higher amount than initially declared. The SRF is calculated at a rate equivalent to the prime rate. In cases where the same return is revised multiple times, the applicable rate is increased by 50%.
The SRF must be calculated and self-declared simultaneously with the revised tax liability.
The severity of sanctions and applicable settlement rules vary based on the so-called qualification of the taxpayers. Taxpayers are categorised into three groups: Reliable, Neutral and Risky. Reliable taxpayers benefit from more lenient treatment, including reduced default penalties, whereas risky taxpayers are subject to stricter sanctions. For neutral taxpayers, standard penalty levels apply by default.
Changes to Hungary’s tax penalty regime
Recent changes to Hungary’s tax penalty regime include the following.
Increase in default fine
The Hungarian government doubled certain penalty amounts from 1 August 2024:
For individuals, the maximum default penalty increased from HUF 200,000 to HUF 400,000
For legal entities, it rose from HUF 500,000 to HUF 1,000,000
Late Payment Interest (LPI) changes
Effective from 1 January 2025, there were changes in:
Calculation method The payable LPI is calculated monthly. Previously, it was annually.
Payment date Previously, the due date was 15th November of the following year.
Based on the new rules for 2024, the LPI was payable by 31 March 2025. For the months of January to March, LPI is assessed in April and is payable by 22 April (as 20 April 2025 is a public holiday). From April 2025 onwards, LPI is levied and accounted for monthly on the taxpayers’ tax accounts and payable by the 20th of the following month.
Rounding rules Late payment interest should be paid without rounding in HUF.
Notification The Tax Office will not send notifications going forward on the amount of the payable LPI, although one will still be sent once the payment threshold has been reached. LPI will be booked on the tax account, and it should be settled monthly without notification. As a transitional rule, the notifications were sent out by the Tax Office for 2024.
Despite the change in the calculation method, no changes were made regarding the threshold under which LPI is not payable. This amount remained HUF 5,000 annually.
The Hungarian Tax Office issued a notification about the changes in LPI settlement on 11 April 2025 and published the corresponding guidance on its website on 3 February 2025.
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This webinar will deepen your understanding of cross-border transactions within SAP. Whether you’re navigating the complexities of VAT or seeking to enhance SAP’s capabilities, this session will provide you with actionable insights and strategies to optimise your processes.
Join us on 30 April for our next VAT Snapshot webinar where we’ll be taking a look at the latest e-invoicing updates across 10 countries: Greece, France, Belgium, Malaysia, Philippines, Portugal, Angola, Israel, Slovenia and Croatia.
In a previous blog, we provided an overview of the current and proposed natural disaster-related measurements in some European countries and Australia. In this blog, we will focus on the possible EU-level solution proposed by the European Central Bank (ECB) and the European Insurance and Occupational Pensions Authority (EIOPA) in their latest discussion paper, issued in December 2024.
The proposal, as was also in the case of their discussion paper from April 2023, focuses on the growing “insurance protection gap” in Europe. It highlights that Europe is the fastest-warming continent in the world. If we look back at only the last six months, there were at least three severe climate-related catastrophes in Europe: Portugal wildfires and the Spanish and the Czech Republic Floods.
Among other significant economic consequences of the increasing frequency and severity of natural catastrophes, we need to highlight the impact of these events on insurance businesses and indirectly on the taxation of the insurance premium amounts.
The paper summarises 12 existing national natural catastrophe insurance schemes which we are going to brief in our blog series – adding the current tax treatment of these schemes. In this blog, we provide an overview of the EU-level solutions as proposed by the paper and a summary of the approaches followed by the EU countries.
Proposal for the possible EU-level solution
A two-pillar solution was included in the referenced document. The two pillars are:
EU public-private reinsurance scheme: This would not substitute the national level reinsurance schemes, it would be additional. This scheme would be voluntary and financed by risk-based premium amounts. The aim of this pillar is to increase the insurance coverage of the natural catastrophe risk where insurance coverage is low.
EU fund for public disaster financing: This second pillar would be made compulsory and aims to finance rebuilding efforts after a high-loss natural disaster. Contributions from member states would finance this.
Both of these pillars could potentially affect the amount of tax payable by the insurance companies on the collected premium amounts. The first pillar might indirectly increase the tax amount levied on the reinsured premium amount, such as in the case of France CCR (Caisse Centrale de Réassurance), where IPT (and contributions to the Major Risk Prevention Fund) is due on the CATNAT premium. The second pillar may trigger newly introduced contributions that might be levied on the insurance premium amounts.
Summary of the national level approaches
The current national schemes aim to broaden insurance coverage. Some countries, like Italy most recently, make certain natural catastrophe risks such as earthquakes, floods and landslides compulsory to be insured by either or both entities or individuals.
In other cases, compulsory reinsurance involving public-private sector coordination exists. The most well-known reinsurance system exists in France, the so-called CCR. However, there is a reinsurance system in Iceland, where insurers collect CATNAT premium amounts and pay them towards NTI (Icelandic Natural Disaster Insurance).
It remains to be seen the extent to which the proposals are acted upon and the impact that they may have on premium taxation regimes in the EU. As it is such a significant topic in insurance currently, Sovos will be keeping a close eye on developments in this area.
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Discover Romania’s recent SAF-T implementation and its complexities with E-Reporting, E-Invoicing, and E-Transport. Learn from established systems in Portugal, Denmark and Norway, and prepare for upcoming SAF-T rollouts in Bulgaria and Hungary, as well as new E-Invoicing mandates across the EU.
Join us for an in-depth webinar designed to help event organisers navigate the complexities of VAT compliance for international events. Discover essential steps for handling cross-border VAT, understand Place of Supply rules for physical and virtual events (including the new 2025 updates) and learn how to avoid common VAT risks.
Our VAT Snapshot series aims to provide you with information to untangle the complex web of tax obligations created by multi-national trading, helping you stay compliant with the latest tax requirements across Europe. In our first webinar of 2025, we’ll discuss the latest e-invoicing updates in Poland, Estonia, Greece and Portugal.
France is one of the most challenging countries in Europe when it comes to the premium tax treatment of motor insurance policies. This is mainly due to the variety of taxes and charges that can apply and the differing treatment of different vehicle types.
This blog provides all the information you need to know about the correct treatment in France.
Which taxes are payable in relation to motor insurance policies in France?
First and foremost, Insurance Premium Tax (IPT) applies to motor insurance provided in France. The rate can vary (rates correct as of December 2024):
The standard rate for risks of any type relating to motor vehicles is 18%
The rate is usually 33% in the case of compulsory class 10 motor liability coverage
The rate for compulsory class 10 coverage is reduced to 15% for coverage provided to commercial agricultural vehicles and commercial vehicles greater than 3.5 tonnes
Class 3 motor cover is treated as a form of property coverage within the scope of contributions to the EUR 6.50 Common Fund for Victims of Terrorism when located in France. There is also a requirement to collect a CATNAT premium (with specific rates for motor coverage which are increasing from January 2025). IPT and contributions to the Major Risk Prevention Fund are due on this premium.
Compulsory class 10 cover triggers National Guarantee Fund contributions. This currently results in three separate rates applicable to premiums, set at 1.2%, 0.8% and 0.58%, respectively.
Finally, it is worth noting that class 3 or 10 coverage of vehicles used for agricultural operations may be excluded from the scope of contributions to the Major Risk Prevention Fund. They do, however, result in separate contributions of 11% due to the National Agricultural Risk Management Fund.
How are taxes on motor insurance policies calculated in France?
The majority of taxes and charges on motor insurance policies in France are calculated as a percentage of the taxable premium and are directly charged to the insured. There are some exceptions, though.
Where applicable, the 0.58% National Guarantee Fund contribution and contributions to the Major Risk Prevention Fund are both insurer-borne so do not result in direct additions to the premiums charged to the insured.
The EUR 6.50 contributions to the Common Fund for Victims of Terrorism are a fixed fee and apply to each insurance contract per annum – regardless of the premium value.
It should also be noted that the IPT treatment of motor insurance can be extended to include ancillary coverage, such as passenger accident cover. This is because the IPT treatment applies to risks of any nature relating to land motor vehicles. It is important to assess each risk to determine whether it is considered a risk related to land motor vehicles as this can be a contentious area in French law.
What vehicles are exempt from tax in France?
Electric vehicles are subject to an IPT exemption, albeit this was amended from January 2024 so that 75% of the premium was treated as exempt (with the remaining 25% being taxable as normal).
A 75% exemption applies to insurance incepting in 2024 for vehicles registered in 2024, but only in relation to the first insurance contract following the vehicle’s registration up to a maximum of 24 months. There is no law currently in effect extending this treatment for vehicles registered in 2025, so such vehicles will not benefit from the 75% exemption as it stands.
Coverage of any nature relating to commercial agricultural vehicles and commercial vehicles greater than 3.5 tonnes benefits from a full IPT exemption, except compulsory class 10 coverage. However, this does not provide an exemption from the applicability of the parafiscal charges mentioned above.
If you still have questions about the taxation of motor insurance policies or IPT inFrance, speak to our experts.
On 5 November, the long-awaited EU Commission’s VAT in the Digital Age (ViDA) proposal was approved by Member States’ Economic and Finance Ministers (ECOFIN). This webinar will examine the three pillars of the ViDA package and how you can prepare for the changes it will bring.
European tax authorities are advancing SAF-T implementation, introducing new requirements that will impact VAT compliance across the region. This webinar will offer insights into key updates, including Portugal’s SAF-T delay to 2026, Ukraine’s on-demand SAF-T for large taxpayers in 2025, Greece’s mandatory transport data fields in myDATA e-books from 1 December 2024, Romania’s SAF-T extension to non-established companies and mandatory e-reporting of B2C invoices from January 2025 and France’s reduced PPF scope and new PDP designation requirement for all companies.
From managing VAT compliance to familiarising yourself with the VAT registration timelines, Alex Smith, Senior Director of Consulting Services will detail the most critical compliance challenges for companies expanding internationally.
Join Steve Sprague, Chief Product & Strategy Officer at Sovos, for an insightful discussion on how SAP customers can navigate the shift toward SAP’s Clean Core and ensure their tax compliance processes are future-ready. As governments worldwide accelerate the move toward digital tax reporting and real-time compliance mandates, businesses face new challenges in staying compliant while managing complex ERP systems.
In Italy, the insurance premium tax (IPT) code (which is being revised as of the date of this blog’s publication) and various other laws and regulations include provisions for taxes/contributions on motor hull and motor liability insurance policies.
This article covers all you need to know about this specific indirect tax in the country.
Which taxes are payable concerning motor insurance policies in Italy?
In Italy, there are four types of charges payable on motor insurance policies:
Insurance Premium Tax (IPT/RCA)
Contributions to the Solidarity for Victims of Extorsion and Usury (CONSAP)
Contributions to the Emergency Fund (EMER)
Contributions to the Road Accident Victims` Fund (RAVF)
How are the taxes calculated for motor insurance policies in Italy?
Whilst motor insurance policies can include various coverages as add-ons, this blog’s main focus is on motor hull and motor liability.
Motor Hull (Class 3)
Calculating taxes on land vehicles, i.e., motor hulls (Class 3), is simple. There is only IPT at 12.5% and CONSAP at 1%.
The taxable premium is the basis of these taxes. Both taxes are declared in the annual IPT return and payable monthly.
Motor Liability (Class 10)
The taxation of insurance policies against civil liability arising from the circulation of motor vehicles is more complex.
The IPT rate (so called Responsabilità Civile Auto or RCA tax) is determined on a provincial level. Legislative Decree 6 May 2011, No. 68 quotes that the rate of the RCA tax is equal to 12.5%. However, this can be increased or decreased by the province or metropolitan city by a maximum of 3.5%. That is why RCA tax rates are sometimes referred to as a tax with a rate ranging from 9-16%.
In Italy, there are 20 regions, each with one or more autonomous provinces or cities. To complicate matters further, the province or city can modify the tax rates within the tax year.
CONSAP does not apply on motor liability policies, however EMER is at a rate of 10.5% with an additional 2.5% required for RAVF.
RCA and EMER are declared in the annual IPT return, and payments are due monthly.
Although RAVF is also declared annually, the declaration process differs, and there is also a prepayment obligation. The actual amount of RAVF depends on the management fee set annually by the Italian insurance supervisory body (IVASS) – the percentage of which is published during November for the next year.
As previously stated, IPT/RCA regulations are undergoing major renewal (during 2024). The legislation governing the tax provisions on private insurance and life annuities (Law 29 October 1961, No. 1216) is part of the Italian Government`s tax reform initiatives.
According to the available draft legislation, the IPT law will be divided into three parts:
Minor taxes (technical aspects of this tax)
Assessment rules (procedure rules)
Penalty regulations
The government extended the deadline for enactment of the new regulation to the end of 2025.
What vehicles are exempt from tax in Italy?
There are not many exemptions available for IPT/RCA tax, nor for CONSAP, EMER and RAVF. However, cars registered in Italy to NATO Allied Force benefit from an exemption from IPT/RCA.
Tax authorities across Eastern Europe continue to move ahead with SAF-T adoption, with upcoming changes impacting VAT compliance requirements for businesses operating in the region.
In this exclusive webinar, you’ll get in-depth insights on:
– Romania’s SAF-T expansion: The tax authorities will expand the scope of businesses impacted by this requirement to non-established companies from January 2025
– Bulgaria’s SAF-T Introduction (2025): Learn about Bulgaria’s planned adoption of the SAF-T framework and what it means for businesses operating in the region
– Poland’s Extended SAF-T Reporting: Discover how Poland is expanding its SAF-T filing requirements and how this may affect VAT compliance and audits
Join our expert, Clementine Mayor, VAT Consultant as she unpacks the latest developments in VAT reporting across Eastern Europe. Don’t miss this opportunity to understand how these changes will shape the future of VAT audits and prepare your business for compliance.
Determining and calculating IPT liabilities in various regions can be challenging.
Sovos IPT Determination is a compliance software designed to streamline Insurance Premium Tax (IPT) calculations and ensure accurate tax reporting.
In this webinar, Ramesh Sudhan, Sovos’ Director of Product and Research & Development, will guide you step-by-step through several typical processes supported by the solution.
Cross-border trade requires navigating complex regulations, customs requirements, and tax laws – with compliance being essential to avoid costly penalties.
Recent mandates in Romania highlight these challenges, emphasising the need for up-to-date knowledge. Businesses trading across the EU must understand country-specific mandates, like VAT obligations and e-invoicing, especially for companies which are VAT-registered in multiple countries.
